FranLab is getting evicted

[fourfathom]

Not sure I understand the gentrification in such a horrific context though? It must not be that bad?

People with money move in, tear down cheap houses and build more expensive ones.  This can result in a general improvement, but it also displaces people who can only afford to rent/buy the cheap houses and often reduces the housing supply.  Nobody likes being pushed out of their neighborhood by rising housing costs and lack of rental availability.
Things change.  Over time gentrification might turn a crime-ridden cesspool into a nice community.  Other times it just pushes lower-income people out.  Often it does both.

[james_s]

Things change.  Over time gentrification might turn a crime-ridden cesspool into a nice community.  Other times it just pushes lower-income people out.  Often it does both.

Often they are one and the same. Obviously not everyone poor is a criminal, but poor areas overall have much higher crime than wealthier areas, that is pretty much universal. It's pretty hard to get wealthy off a life of petty crime.

[Stray Electron]

Not sure I understand the gentrification in such a horrific context though? It must not be that bad?

People with money move in, tear down cheap houses and build more expensive ones.  This can result in a general improvement, but it also displaces people who can only afford to rent/buy the cheap houses and often reduces the housing supply.  Nobody likes being pushed out of their neighborhood by rising housing costs and lack of rental availability.
Things change.  Over time gentrification might turn a crime-ridden cesspool into a nice community.  Other times it just pushes lower-income people out.  Often it does both.

    Gentrification isn't too bad as long as you own your own property but if you rent then your costs are going to go up, up and up until you are priced out of that area.  That's the position Fran is in.  At least if you buy before the price went up then you can make a tidy profit, but if you rent you get nothing.  Except being forced out.

[james_s]

Gentrification isn't too bad as long as you own your own property but if you rent then your costs are going to go up, up and up until you are priced out of that area.  That's the position Fran is in.  At least if you buy before the price went up then you can make a tidy profit, but if you rent you get nothing.  Except being forced out.

That's just the reality of renting. If you rent, you can't count on living in the same place forever, in fact you can pretty much count on having to move at some point. A person that plans to rent their whole life had better be flexible on location.

[EEVblog]

Gentrification isn't too bad as long as you own your own property but if you rent then your costs are going to go up, up and up until you are priced out of that area.  That's the position Fran is in.  At least if you buy before the price went up then you can make a tidy profit, but if you rent you get nothing.  Except being forced out.

That's just the reality of renting. If you rent, you can't count on living in the same place forever, in fact you can pretty much count on having to move at some point. A person that plans to rent their whole life had better be flexible on location.

Yes. Only way you are going to avoid problems is by having a good income to keep pace with the rental price growth in the area. But having a good income usually means that you can afford to buy a place.
Fran actually has what would be considered a decent high income. Her expenses alone last year were $70k and projected to go higher this year, and she is able top pay that. So after taxes she has to be earning something approaching $100k.
That's a lot of money. Median household income in Pennsylvania is just over $63k
https://www.census.gov/quickfacts/fact/table/PA/INC110220
She seems to be in the upper earning bracket.
https://www.ziprecruiter.com/Salaries/--in-Pennsylvania

She has lived in other smaller parts of Pennsylvania before and she survived. Don't see why she can't do that again.
If you like Phily, live within say a 30min drive so you can visit and hang out all the time.

It sucks that the structure of her income won't let her get a home loan, but even if it did, she'd still be in the same problem if she insisted on buy in downtown Philly.
The apartment rental issue might go away if she could buy one, but the two storaghe units and factory problem remain.

[SiliconWizard]

Well there are signs of the real estate market "crashing" in many western countries, so if she can wait for a bit, there may be some affordable stuff to buy. The problem will still be getting a loan unless she can pay cash, which she probably can't. Now I've heard of some organizations that can help independent workers getting home loans - dunno if there are any in her area, but that's worth a look.

[nctnico]

Well there are signs of the real estate market "crashing" in many western countries, so if she can wait for a bit, there may be some affordable stuff to buy. The problem will still be getting a loan unless she can pay cash, which she probably can't. Now I've heard of some organizations that can help independent workers getting home loans - dunno if there are any in her area, but that's worth a look.

The problem is that the interest rates are rising quickly as well so people can borrow less money. In the end the best thing Fran can do right now is get rid of most of her expenses and save money for a couple of years. If she earns about $100k a year as Dave suspects then saving $50k a year is not out of the question so getting enough money for a significant downpayment to get her own place is easy to do. From there on it is all unicorns and rainbows.

[EEVblog]

Well there are signs of the real estate market "crashing" in many western countries, so if she can wait for a bit, there may be some affordable stuff to buy. The problem will still be getting a loan unless she can pay cash, which she probably can't. Now I've heard of some organizations that can help independent workers getting home loans - dunno if there are any in her area, but that's worth a look.

I'd also be looking at trying to structure the business in way that it at least looks like she's drawing a wage.
Maybe setup some non-profit through a trust and take a wage as an employee or something.
With the intent that if the banks don't dig deep enough to find out, that's their problem 
The thing is, you want to do that right now with a view to having a years worth of stable wage statements.

[EEVblog]

The problem is that the interest rates are rising quickly as well so people can borrow less money. In the end the best thing Fran can do right now is get rid of most of her expenses and save money for a couple of years. If she earns about $100k a year as Dave suspects then saving $50k a year is not out of the question so getting enough money for a significant downpayment to get her own place is easy to do. From there on it is all unicorns and rainbows.

Agreed.
Continue to live in the partment in Philly, but consolidate the two storage spaces and the workshop outside of the city, with the intent of saving as much cash as possible for a couple of years.
Drive there to get stuff and do videos on site if needed.
Heck, she might even be able to find a fan who has a big spare barn or something she can rent cheap. All she has to do is put the call out and someone will offer something or find something. As I've always said, crowd source a solution. You'll get 99% unhelpful suggestions, but you only need one to be a winner.

We'd need to know the expense breakdown of the storage units and factory though.
She said the factory would be the first to go. Not sure if that's because it's the biggest expense or because it's used the least. I suspect the latter. For reference, she said she didn't visit the factory once during the 18 month lockdown, but still had to pay rent. And her channel and content during that time did just fine.

She could also consider a channel pivot to stuff that she can readily do in her apartment/FranLab, like she did during the lockdown.
If she has to travel 30min or an hour each way to a storage space to get something once a week, no big deal.

[SiliconWizard]

Well there are signs of the real estate market "crashing" in many western countries, so if she can wait for a bit, there may be some affordable stuff to buy. The problem will still be getting a loan unless she can pay cash, which she probably can't. Now I've heard of some organizations that can help independent workers getting home loans - dunno if there are any in her area, but that's worth a look.

I'd also be looking at trying to structure the business in way that it at least looks like she's drawing a wage.
Maybe setup some non-profit through a trust and take a wage as an employee or something.
With the intent that if the banks don't dig deep enough to find out, that's their problem 
The thing is, you want to do that right now with a view to having a years worth of stable wage statements.

Sure, problem is that getting a decent wage (decent enough to convince banks for a loan) is going to cost a lot of her income. Not sure about over there, but over here various taxes employers have to pay are gigantic. May not be as bad in the US, but still, she would likely have to make significantly more than she currently does.

[EEVblog]

Sure, problem is that getting a decent wage (decent enough to convince banks for a loan) is going to cost a lot of her income. Not sure about over there, but over here various taxes employers have to pay are gigantic. May not be as bad in the US, but still, she would likely have to make significantly more than she currently does.

Simple. All the money goes inot the non-profit. She draws near 100% of the company income from the non-profit as a wage. The non-profit earns nothing so pays no tax. She pays tax as a wage earner.
She wouldn't (or shouldn't) pay more, it's just a matter of structure.

[Quarlo Klobrigney]

And why leave such an idyllic landscape. Opportunities simply abound:


https://www.bitchute.com/video/3oaXQCqtpg1i/


Filthadelphia starts at around 7:47

[Stray Electron]

Well there are signs of the real estate market "crashing" in many western countries, so if she can wait for a bit, there may be some affordable stuff to buy. The problem will still be getting a loan unless she can pay cash, which she probably can't. Now I've heard of some organizations that can help independent workers getting home loans - dunno if there are any in her area, but that's worth a look.

   LOL! Don't count on a "housing market crash" to benefit you as a non-WEALTHY home buyer or as a renter! I've been through several of the big market crashes and the only real affect that I've seen is that some of the new or very newish UBER-expensive houses drop in value but I've never seen rental rates drop or a drop in the price of low to moderate priced houses.  The news media like to act like the sky is falling but for most people the "housing market crashes" are a big nothing burger.

   The usual result of such crashes is that builders slow down building new expensive homes and within a few years there is a shortage of houses and that ripples down through the home market and eventually creates more demand for rentals. And in 7 to 10 years there is a serious shortage of rentals and the rental rates go up dramatically.  All of central and south Florida is going through a real crisis in the availability and costs of rental property right now (down 20+% and up 25+% respectively in the past year) but at the same time, the new housing starts are ZERO there.  (They don't build cheap or moderately priced homes here. Everything they build is at the very top of the market price range.)

    We recently looked at one new development that was under construction before everything started grinding to halt, and the starting price was $440,000 PLUS and that was for one section of a quadplex (four houses under one roof) sandwiched between a busy expressway and a very busy highway.  I think they were around 1650 ft2 and certainly nothing fancy.

[james_s]

Here in a suburb about 10 miles from Seattle there is a "low income" development a couple miles from me which is a mobile home park of the sort where people own their lots. Over the summer I remember seeing a new doublewide on a corner lot with hardly any land was $500k. I bought my own house back in 2004 and even during the 2008 housing crisis it never dropped down to what I paid for it.

[Bud]

Sure, problem is that getting a decent wage (decent enough to convince banks for a loan) is going to cost a lot of her income. Not sure about over there, but over here various taxes employers have to pay are gigantic. May not be as bad in the US, but still, she would likely have to make significantly more than she currently does.

Simple. All the money goes inot the non-profit. She draws near 100% of the company income from the non-profit as a wage. The non-profit earns nothing so pays no tax. She pays tax as a wage earner.
She wouldn't (or shouldn't) pay more, it's just a matter of structure.

I am not sure this would fly. Say there is a question in the credit line or mortgage application: " Are you self-employed?". What in this case Fran's answer would be?

[sokoloff]

I am not sure this would fly. Say there is a question in the credit line or mortgage application: " Are you self-employed?". What in this case Fran's answer would be?

If Fran-the-Person works for Fran-the-Person, she is self-employed.

If Fran-the-Person works for FranLab, Inc., she is not self-employed, IMO, but rather is an employee of FranLab, Inc.

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

[SiliconWizard]

Again I don't know about the US laws  for employers exactly, but over here and others parts of the world, employers have to pay taxes on employees. The net wage gotten by the employee is only a fraction of what the employers pays for them in the end. So it's not just a matter of not paying taxes on the company's benefits (that you could indeed avoid using various tricks including creating a non-profit organization or some other scheme). Employers' taxes are particularly bad over here (with all the social taxes) and it gets to nearly *twice* the net wage. It's probably a lot less than this in the US. But if you want to have a status of *employee*, then you don't have a choice. Over here it would cost almost twice the net wage. In the US, I guess it's not that bad.

That means that in some countries, for a given revenue, you'll get a bigger chunk of it with an independent status than if you become an employee. But of course you get less protection as an independent worker. I'm certainly "burnt" by the horrible cost of employment over here. Yep, for say a net 3000 eur/month wage, the company has to shell out nearly 6000 eur.

[tom66]

Well there are signs of the real estate market "crashing" in many western countries, so if she can wait for a bit, there may be some affordable stuff to buy. The problem will still be getting a loan unless she can pay cash, which she probably can't. Now I've heard of some organizations that can help independent workers getting home loans - dunno if there are any in her area, but that's worth a look.

I doubt the market will ever properly crash though.  What will happen is due to rate rises it'll become harder to buy somewhere for average / low income people.  Property prices will remain high as long as supply continues to lag demand and this is the case in nearly every urban and suburban area in the western world.

[sokoloff]

Property is unlikely to crash in terms of affordability. It will have cycles in terms of nominal purchase price.

The affordability problem has to be looked at with at least one eye on the competition among marginal buyers, whether prospective owner-occupants or landlords.
If a prospective owner-occupant has less financial resources than the typical “competition” for a given type of house, they’re going to get outbid in a supply-constrained market, whether mortgages are 3%, 13%, or 23%.

[EEVblog]

Again I don't know about the US laws  for employers exactly, but over here and others parts of the world, employers have to pay taxes on employees. The net wage gotten by the employee is only a fraction of what the employers pays for them in the end.

A fraction? That can't be right.
Here it's 5.1% "payroll tax" but only if you have over $1.2M in wages.
https://www.payrolltax.gov.au/resources#resources__rates_and_thresholds

There are other small costs but it's basically no big deal.

[EEVblog]

I am not sure this would fly. Say there is a question in the credit line or mortgage application: " Are you self-employed?". What in this case Fran's answer would be?

If Fran-the-Person works for Fran-the-Person, she is self-employed.

If Fran-the-Person works for FranLab, Inc., she is not self-employed, IMO, but rather is an employee of FranLab, Inc.

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

I think Fran has said in the past that's not how it works with the bank, and they are ones that make the rules in who they lend too. It's a matter of how deep they dig.
Here you can potentially hide behind a trust that owns a company that employs you.
Although here I don't have a major probem getting a loan being the sole director of my own company, although it is treated differently to being employed by a large company that you aren't a director of.

[Nusa]

Again I don't know about the US laws  for employers exactly, but over here and others parts of the world, employers have to pay taxes on employees. The net wage gotten by the employee is only a fraction of what the employers pays for them in the end. So it's not just a matter of not paying taxes on the company's benefits (that you could indeed avoid using various tricks including creating a non-profit organization or some other scheme). Employers' taxes are particularly bad over here (with all the social taxes) and it gets to nearly *twice* the net wage. It's probably a lot less than this in the US. But if you want to have a status of *employee*, then you don't have a choice. Over here it would cost almost twice the net wage. In the US, I guess it's not that bad.

That means that in some countries, for a given revenue, you'll get a bigger chunk of it with an independent status than if you become an employee. But of course you get less protection as an independent worker. I'm certainly "burnt" by the horrible cost of employment over here. Yep, for say a net 3000 eur/month wage, the company has to shell out nearly 6000 eur.

The short answer on US tax law is that self-employed people get the honor of paying both halves (the employers AND the employees) of the social security and medicare taxes on profits of $400 or more. Which makes it perfect for those who just have a low-key side-hustle. Or a hobby that occasionally makes a couple bucks on the side.

The long answer is it's complicated, but often the right form of incorporation can save some serious bucks at tax time. It also may help protect your personal assets from corporate liabilities, should things go badly. Naturally there's a lot more paperwork and bother.

[EEVblog]

The long answer is it's complicated, but often the right form of incorporation can save some serious bucks at tax time. But naturally there's a lot more paperwork and bother.

I've spoken with Fran about it before and she doesn't seem that willing to investigate options here, as she seems to think the banks still won't touch her anyway. If that's true then you wouldn't bother of course. But I can't help but think there is a way...
And being the US, just moving states seems to make a huge difference in the way things are done. That's just not really a thing here in Australia.

[Nusa]

In Fran's current business situation, her spending exceeds her income right now. No profits to tax, so no big tax bills.

[EEVblog]

In Fran's current business situation, her spending exceeds her income right now. No profits to tax, so no big tax bills.

She has mentioned that tax is a sizeable problem. I think they tax the money coming from Patreon and google before she gets it or something.
How it works here is if my busines expenses (including wages) matches my business income then my business pays zero tax.
I get taxed as a wage earner though.